Health ServicesAdministration

Transcription

1 A M E R I C A N F I D E L I T Y Health ServicesAdministration

2 HSAs the American Fidelity Way: Knowledge, Experience, Commitment American Fidelity Assurance Company (AFA) is a pioneer in administering Section 125 flexible benefit plans. Putting our knowledge and know-how to work for you is what we do best. Perhaps most important, Health Services Administration, LLC dba American Fidelity Health Services Administration (AFHSA) is an independent HSA administrator. No matter who your comprehensive medical provider may be, we are here to help. We handle your HSA administration needs while you make medical plan decisions based on your best interests. The power is yours, the work is ours. The bottom line when it comes to you and your family is that you would do almost anything to guarantee their health and safety. But, these days it seems that the cost of staying well does not help maintain a healthy bottom line for the average household. Especially when you consider the rising costs of health care and the pinch of health plan restrictions that makes it harder to get the care you seek. What if there was a way to save for medical expenses even into retirement and get away from the red tape of traditional medical plans to gain freedom of choice and quality protection? Don t wait for tomorrow, the answer is here today: Health Savings Accounts (HSAs). Consider the advantages this tax-advantaged medical savings option can provide you: 1. Invest in Yourself You can make contributions and get an above-the-line tax deduction. Balances roll over from year to year. There is no Use it or Lose it clause. Contribution dollars are invested in interest-bearing accounts. 2. Flexibility HSA dollars can pay for qualified medical expenses defined by the IRS. Eligible expenses include: deductibles, co-payments, dental and vision expenses, and doctor appointments that are not covered by other insurance. You decide how much to put into your HSA, what medical expenses to pay from the account, whether to invest, and which investments to make. You take part in your health care and provider decisions while choosing the best way to spend your hard-earned dollars. Use funds to pay for current medical expenses or save money for future needs. 3. Portability No matter where you go, your account will follow. Even if you change jobs, change medical coverage, become unemployed, move to another state, or change your marital status, your HSA goes with you. You own it! 4. Tax Savings The three-tiered tax savings are hard to beat 1. Tax-free contributions 2. Tax-free growth 3. Tax-free withdrawals for qualified medical expenses Learn more

3 Get to Know American Fidelity Health Services Administration American Fidelity Health Services Administration (AFHSA) is proud to be a member of the American Fidelity family of companies. American Fidelity Assurance Company is a family-owned organization with a 50-year history of providing our customers with sound financial security solutions. We are proud of our association with one of the top-rated insurance companies in the nation. There is so much to learn about saving today to pay for healthcare tomorrow. With American Fidelity Health Services Administration you gain that knowledge and increase your power of opportunity by letting us help you find the options that are right for you. What Makes Us Different? Independence AFHSA will be your HSA administrator no matter which insurance provider you use. Freedom of Choice We know that you work hard for your money, and that is why you should decide the best way to spend it. When you are not tied down by the restrictions of typical medical coverage and you decide where the dollars in your account are best spent, you gain the option to grow your savings. Plus, once your account balance reaches $2,500, you may choose to invest your additional funds in a strong offering of mutual funds that cross all investment risk tolerances. Maintaining Focus We take a centralized approach, focusing on all your health savings needs from setting up your basic account to assuring you have the investment options that will work best for you. Ease of Access These are your funds, so accessing them should be easy. That s why we offer payment of qualified expenses through a debit card, online payment request submission and downloadable payment request form. Since use of HSA funds are only available if funds are in your account, these withdrawal options help you ensure that funds are available and prevent overdraft charges. Online Access 24/7 Our online offerings make sure you are up-to-date with your account information, offering access to: Account summaries Portfolio allocation Mutual fund trades Transaction history Customer Service We understand Customer Service is important to you. Our commitment is to have personnel available to assist you, not an automated response. Whether you have questions about your account or you need investment assistance, Customer Service is available to assist you at or or by fax at or by ing us at hsa-support@af-group.com. And of course you have access to your account information 24/7 via our Web site, Account Features We know that everyone is different, so it only makes sense that your account investments match your needs. Your funds are deposited into an interest bearing FDIC insured account. The more you save the more interest you earn. You have three convenient ways to access your funds: Debit Card - Use the debit card at different vendors, for example a doctor s office or pharmacy, to get immediate access to HSA funds for qualified medical expenses. The debit card can be used at any qualified medical provider. On-line Withdrawal - Withdrawals can be requested online either before or after an expense has been incurred. Simply indicate you want funds sent to you via check by mail or by direct deposit to one of your checking or savings accounts. Distribution Request If you want us to enter the withdrawal for you, simply complete the form and mail or fax it to us. A debit card is automatically mailed to you at the opening of your account. One additional debit card may be ordered for your spouse or a tax dependent (must be at least 18 years old) at no additional fee. If your major medical plan discounts services, you should not use your debit card at the time of service, unless you know your exact cost. Instead, when you receive a statement (EOB) from your health plan provider showing any discounted rates and applied insurance payments, you simply call the provider and give them your debit card number at that time. No need to mess with writing a check, paying for postage or remembering to mail your payment. Investment Options If you seek higher returns or value security, we do not charge transaction fees or broker commissions when we give you access to investment fund options that cover the spectrum of investment risks. (Fees associated with certain mutual funds may be incurred. Review the mutual funds prospectus for additional information when you are ready to invest.) American Fidelity Health Services Administration provides a strong offering of no load mutual funds that cross all investment risk tolerances. You pick the mutual fund that best suits your needs and risk tolerance from our carefully monitored list. A minimum of at least $2,500 should be maintained in your cash account before you invest in the mutual funds offered.

4 What is an HSA? The Tax Advantage Health Savings accounts(hsas) were created, as part of the Medicare Reform Act signed into law by Congress December 2003 and regulated by the IRS Code, to provide individuals with a Qualified High Deductible Health Plan (QHDHP) a tax free option to pay for qualified medical expenses and save for future ones. How Does It Work? Experience the money-saving advantages whether you make a deposit, withdraw funds to cover qualified expenses, or save unused funds that rollover each year. HSAs provide a tax advantage across the board. Contributions HSA Withdrawals An HSA and a qualified HDHP work as partners to offer you protection in time of need while empowering you as a conscientious health consumer. First, money deposited tax-free into an HSA is used for qualified medical expenses not covered by insurance or that fall short of your plan s deductible. Next, the high deductible plan with traditionally lower premiums would kick in to cover any larger, qualified medical expenses should the need arise. You gain the power to choose the best way to use the money typically spent on health insurance alone and the potential to let the account grow tax-favored until you need it most. It Makes Sense for Your Dollars Interest Tax-Free Contributions HSA contributions are 100% tax deductible. A qualified individual can make contributions and receive an above-the-line tax deduction, meaning the contributions reduce the individual s adjusted gross income before any itemized or standard deductions are considered. Individuals who have contributions deducted from their paychecks through their employer s sponsored Section 125 Cafeteria Plan can take advantage of tax savings each month. Tax-Free Growth Interest and investment earnings on HSA funds are generally tax-free. Tax-Free Withdrawals Withdrawals avoid taxation entirely when withdrawn for qualified medical expenses. 100% of premiums goes to the insurance company More affordable premium means savings can be placed in an HSA - tax free.

5 Am I Eligible? There are several items to consider in the establishment and contribution to an HSA You must be covered under a qualified high deductible health plan (QHDHP) that meets the following guidelines. Check with your insurance carrier or employer about a qualified HSA Health Plan. Health Insurance Plan Annual Minimum Deductible Annual Maximum Out-of-Pocket Expenses Self-only Coverage $1,200 $6,050 Family Coverage $2,400 $12,100 Self-only Coverage $1,250 $6,250 Family Coverage $2,500 $12,500 1 You are not eligible for an HSA if you have a general purpose health Flexible Spending Account or Health Reimbursement Arrangement through your employer or your spouse s employer which allows reimbursement of your medical expenses. However, you can have a limited purpose FSA or HRA which restricts reimbursements to eligible Vision and Dental expenses. In addition, your eligibility may be affected if you have access to the following: Employer s on-site clinic, VA benefits, Tri-Care or an Indian Clinic. Note: Exceptions apply for certain limited coverage types such as worker s compensation, liability, property or casualty insurance or insurance for a specified disease or illness that covers a fixed amount per specified period of hospitalization. 2 Even if you are eligible for Medicare, as long as you are not enrolled in Part A, Part B, Part C or Part D, you can establish and contribute to an HSA. Once enrolled in Medicare, you can no longer make contributions, however, you can continue to use or save the funds already accumulated in your HSA. For a complete list of HSA eligibility rules, see IRS Publication 969. Deductible must apply to all medical expenses, including prescriptions, except preventative care. Family coverage means any coverage other than self-only coverage that also covers the individual. Minimums and Maximums are indexed annually. In addition, to be an eligible individual, you must establish that you are not: Being claimed as a dependent on another person s tax return. Covered by any other health plan 1 that is not a qualified HDHP. Covered under any other type of health benefit 1 that covers some of the medical expenses that are covered by a qualified HDHP Enrolled in Medicare 2

6 How do contributions work? You, your family members, and/or your employer can make contributions to your HSA. Unused balances at the end of each year carry forward to following years and there is no limit on the total account accumulation. The following guidelines apply when making contributions. The maximum annual contribution you can make in any one tax year is the maximum established by law. Individual Coverage Family Coverage 2012 $3,100 $6, $3,250 $6,450 Maximums are indexed annually. If you are at least 55 years of age and not currently participating in Medicare you can take advantage of a catch-up contribution of $1,000 per year. You can make the maximum contribution no matter when you turn 55 in the tax year. If the effective date of your qualified HDHP is other than January 1, you can make the maximum contribution allowed by the IRS; however, special guidelines apply. If you contribute the maximum allowed in any tax year where the QHDHP is in force less than 12 months, regulations require that you remain a qualified individual for every month in that tax year following the effective date of the QHDHP plus the entire 12 months of the following tax year known as testing period. If you do not remain a qualified individual during the testing period, then a portion of your contributions are subject to income taxes and a 10% additional tax penalty. Example: You purchased QHDHP Self-Only Coverage effective 09/01/12. You can contribute the maximum of $3,100 in 2012 even though your qualified HDHP was not in effect during the entire 2012 tax year. You will need to remain a qualified individual from 09/01/12 to 12/31/13 to avoid the contributions being subject to income taxes and penalties. Let s say you lost your status as a qualified individual as of 03/01/13, the total contributions attributed to the 2012 tax year, less the prorated monthly contributions that were allowed for the months that you were eligible to contribute to an HSA, are subject to income taxes and a 10% additional tax penalty. (The excess funds are allowed to remain in the HSA - withdrawing them for a reason other than to pay for qualified medical expenses would increase the penalty by an additional 20%.) The income taxes and the 10% additional tax penalty, will not apply if an individual becomes disabled or dies during the testing period. You can avoid contributions being subject to the testing period requirements if you pro-rate your contributions based on the number of months you are covered by a qualified HDHP in any given tax year. To take the example above, an individual would calculate the maximum contribution as follows: $3,100 divided by 12 months = $ x 4 months of QHDHP coverage (09/01/12-12/31/12) = $1, Attn: Sole proprietors, partners or shareholders of Subchapter S Corporations can establish and contribute to an HSA on a tax advantaged basis. However, such individuals may not contribute to an HSA on a pre-tax basis via an employer s Section 125 cafeteria plan.

7 How do I use my HSA? Money from your HSA can be used to pay for qualified outof-pocket medical expenses for yourself, your spouse or your tax dependent children even if they are not covered under a qualified HDHP. Qualified medical expenses, as outlined by the Internal Revenue Code Section 213(d), include deductibles, hospital care, vision care, doctor visits, prescriptions, dental care, and over-the-counter medication to name just a few. Over-the-counter drugs and medicines will only be considered eligible medical expenses if prescribed by a medical practitioner. You can use the money from your HSA at any time once the HSA is established, for qualified medical expenses incurred after the establishment of your HSA, and as long as funds are available in the account. And even if you decide not to make withdrawals from your HSA for qualified medical expenses at the time they are incurred, you can always make withdrawals for these expenses anytime in the future. For the most part, other health insurance premiums, including dental and vision care premiums, are not qualified expenses. Exceptions to this rule include: Long-term care coverage subject to limits established by the IRS, Health plan coverage while receiving unemployment benefits, COBRA continuation coverage, and For those age 65 or older, any tax-deductible health insurance*, other than a Medicare supplemental policy. What is the tax treatment of an HSA? 1. The funds within the HSA belong to you tax-free based on the qualifications outlined in the IRS regulations. 2. As with any deduction you claim on your income taxes, keep your receipts for withdrawals you make from your HSA to show money was withdrawn for qualified expenses that were not reimbursed from other sources. 3. Funds withdrawn for any other reasons are taxable as income and subject to an additional 20% penalty. After age 65, funds withdrawn are taxable at the normal income tax rate but no penalty applies. 4. You can take an above-the-line tax deduction on your Form 1040 for your contributions (even if you do not otherwise itemize).* If you contribute to your HSA through your employer s Section 125 plan, your contributions are made on a pre-tax basis, so you would not deduct them on Form *Always check with your tax advisor or the IRS to ensure accuracy. *Qualified expenses from an HSA for individuals enrolled in Medicare include premiums and out of pocket expenses, but do not include Medigap premiums

8 American Fidelity Health Services Administration: American Fidelity Health Services Administration (AFHSA) has been an independent HSA provider since Our independence means that, unlike many other HSA trustees that are integrated with the major medical plan, we give you more flexibility to make changes to your medical plan insurer or administrator without the need to change HSA providers and affect your HSA. Additionally, AFHSA gives consumers the opportunity to drive your health care decisions and provide the tools, resources and services needed to ensure that you are taking advantage of what an HSA has to offer. Our team of specialized individuals in the world of HSAs and their relationship with a High Deductible Health Plan, provide every customer personal attention and a wealth of options to meet their individual needs. Easy 24-hour online access and investment opportunities that fit your requirements make AFHSA the right choice. American Fidelity Health Services Administration is an affiliate of American Fidelity Assurance Company(AFA). A third-generation, family-owned organization, AFA provides insurance products and financial services to education employees, trade association members and companies throughout the United States and across the globe. Since 1982 AFA has been rated A+ (Superior)1, by A.M. Best Company, considered one of the nation s leading insurance company rating services. A.M. Best bases its ratings on an analysis of the financial condition and operating performance of insurance companies in such vital areas as: Competency of Underwriting, Control of Expenses, Adequacy of Reserves, Soundness of Investments and Capital Sufficiency. American Fidelity Assurance Company received Weiss Ratings B+ rating, which places AFA in the top 16.3 percent of companies in the industry. 2 Here for you today and always, American Fidelity Health Services Administration is dedicated to serving our customers and their investments with the respect they deserve (April 3, 2012) (A+ is the 2nd out of 16 with 1 being the highest) 2. (January 13, 2012) (B+ is the 4 out of 16 with 1 being the highest) Neither American Fidelity Health Services Administration nor American Fidelity Assurance Company provide tax advice. For questions about HSA eligibility, tax treatment of an HSA or HSA distributions, or HSA questions related to filing your taxes, contact your tax advisor and/or visit For more information, consult: SB N. Classen Blvd. Oklahoma City, OK